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                              ASSIGNMENT AGREEMENT


                                     BETWEEN


                             BANKERS TRUST COMPANY,
                      AS TRUSTEE OF THE NATIONAL FINANCIAL
                          AUTO RECEIVABLES MASTER TRUST


                                       AND


                    NATIONAL FINANCIAL AUTO FUNDING TRUST II


                            ------------------------


                          DATED AS OF DECEMBER 15, 1997

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                              ASSIGNMENT AGREEMENT
                              --------------------

                  ASSIGNMENT AGREEMENT, dated as of December 15, 1997 by and
between NATIONAL FINANCIAL AUTO FUNDING TRUST II, a Delaware business trust
("Funding Trust II"), and BANKERS TRUST COMPANY ("Bankers Trust" or the
"Trustee"), not in its individual capacity but solely as Trustee of the National
Financial Auto Receivables Master Trust (the "Master Trust"), under the Pooling
and Administration Agreement, dated as of December 8, 1994 (the "Pooling and
Administration Agreement"), among Funding Trust II, as Transferor, National Auto
Finance Company, Inc. ("NAFI") (as successor to National Auto Finance Company
L.P.), as Administrator, and Bankers Trust Company, as Trustee.


                              W I T N E S S E T H:
                              -------------------

                  In consideration of the mutual covenants herein contained,
Funding Trust II and the Trustee agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  1.1. Incorporation of Definitions. Capitalized terms used but
                       ----------------------------
not defined herein have the meanings ascribed to them in the Pooling and
Administration Agreement.

                  1.2. Other Definitions. When used in this Agreement, the
                       -----------------
following words and phrases shall have the following meanings:

                  Cut-off Date:  As defined in Section 2.1.

                  Closing Date:  January 20, 1998.

                  Dealer: A dealer who sold a Financed Vehicle and who
originated and assigned the respective Receivable to NAFI or an Originator under
a Dealer Agreement.

                  Dealer Agreement: Any agreement between NAFI or an Originator,
as applicable, and a Dealer relating to the acquisition of Receivables from a
Dealer by NAFI or an Originator.

                  Originator: A consumer finance company, depository institution
or other financial institution engaged in the financing of motor vehicle retail
installment sale contracts from which NAFI acquired Receivables; provided,
however, that "Originator" shall not include any Dealer.

                  Originator Agreement: An agreement pursuant to which NAFI
acquired Receivables from an Originator.

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                  Outstanding Principal Balance: As of any date and with respect
to any Receivable, the outstanding principal balance of such Receivable as of
such date, which shall be computed by reducing the original principal balance of
such Receivable by the principal portion of each payment received and processed
by the Servicer on or before such date.

                  Purchase Price:  As defined in Section 2.1.

                  Receivable Assets: The assets described in clauses (i) through
(ix), inclusive, of subsection 2.1 hereof.

                  Related Security: means, with respect to any Receivable, the
interest of the Trustee in (i) the security interest in the Financed Vehicles
granted by the Obligors of the Receivables and any accessions thereto and (ii)
physical damage, credit life, credit disability or other insurance policies
covering Financed Vehicles or Obligors (including any blanket vendor's single
interest insurance policy).

                  Receivables Schedule: The schedule of Receivables attached as
Schedule 1 hereto, such schedule identifying each Receivable by name of the
Obligor and setting forth as to each Receivable its Outstanding Principal
Balance as of the Cut-off Date, loan number, interest rate, scheduled monthly
payment of principal and interest, final maturity date and original principal
amount.

                                   ARTICLE II

                                PURCHASE AND SALE

                  2.1. Purchase. Subject to and on the terms and conditions set
                       --------
forth herein, the Trustee hereby sells, transfers, conveys and assigns, on
behalf of the Master Trust, without representation, warranty or recourse, except
as specifically set forth herein all of its right, title and interest in and to
(i) the Receivables identified on the Receivables Schedule attached hereto as
Schedule I, (ii) all monies paid or payable thereunder on or after December 15,
1997 (the "Cut-off Date"), (iii) the Related Security with respect to each such
Receivable, (iv) all proceeds of the foregoing, including all Collections or
Related Security with respect to such Receivables, or other recoveries applied
to repay or discharge any such Receivable received on or after the Cut-off Date
(including net proceeds of sale or other disposition of repossessed Financed
Vehicles that were the subject of any such Receivable) or other collateral or
property of any Obligor or any other party directly or indirectly liable for
payment of such Receivables, (v) all of its right, title and interest in the
Seller Transaction Documents, (vi) all Records relating to any of the foregoing,
(vii) all rights of the Trustee assigned to the Trustee for the benefit of the
Certificateholders against Dealers pursuant to Dealer Agreements and Originators
pursuant to Originator Agreements; (viii) any other Trust Assets relating to the
Receivable Assets and (ix) the proceeds of the foregoing. Funding Trust II
agrees to pay to the Trustee on the Closing Date as the purchase price (the
"Purchase Price") for the Receivable Assets sold hereunder on such date an
amount equal to $63,979,266.49 in 

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immediately available funds to an account at a bank designated by the Trustee to
Funding Trust II.

                  2.2. Filings. (a) On or prior to the Closing Date, the Master
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Trust shall have filed or shall have caused the filing, in the office of the
Secretary of State of New York, the office of the Secretary of State of Florida
and the office of the Secretary of State of Delaware, (i) a UCC financing
statement or statements, appropriate under the Uniform Commercial Code in effect
in New York, Florida or Delaware to reflect the transfer of the Receivable
Assets from the Trustee to Funding Trust II and to protect Funding Trust II's
interest in the Receivable Assets against all other Persons and (ii) amendments
to, and/or terminations of, UCC financing statements, appropriate under the
Uniform Commercial Code in effect in New York, Florida or Delaware to reflect
the release of any liens of the Master Trust in the Receivable Assets. During
the term of this Agreement, the Trustee shall not change its name, identity or
structure or relocate its chief executive office or principal place of business
without first giving 60 days prior written notice to Funding Trust II and
Financial Security Assurance Inc. ("Financial Security") (for so long as any
policy issued by Financial Security Assurance Inc. is in effect with respect to
any securities issued by Funding Trust II or any trust of which Funding Trust II
is depositor or transferor); provided, however, that Funding Trust II has no
right or power to prohibit a change in the Trustee's name, identity or structure
or, subject to the last sentence of this paragraph, a relocation of, its chief
executive office. If any change in the Trustee's name, identity or structure or
the relocation of its chief executive office or principal place of business
would make any financing or continuation statement or notice of lien filed in
connection with this Agreement seriously misleading within the meaning of
applicable provisions of the UCC or any title statute, Funding Trust II, shall
after the effective date of such change, promptly file or cause to be filed such
amendments as may be required to preserve and protect Funding Trust II's
interest in the Receivable Assets. Funding Trust II hereby directs the Trustee
to deliver cash equal to all such payments described in this Section 2.2(b) to
be delivered to Harris Trust (as defined herein) in its capacity as the Trust
Collateral Agent under the Sale and Servicing Agreement (as defined herein). 

                  (b) On or prior to the Closing Date, the Trustee shall deliver
to Funding Trust II or such other Person as Funding Trust II shall direct cash
equal to all payments received on such Receivables on or after the Cut-off Date
and on or before two Business days prior to the Closing Date. Within two
Business Days after the Closing Date, the Trustee shall deliver to Funding Trust
II or such other Person as Funding Trust II shall direct all other payments
received on such Receivables on or after the Cut-off Date and on or before the
Closing Date.

                  2.3. No Recourse. The sale and purchase of Receivables and the
                       -----------
other Receivable Assets under this Agreement shall be without recourse to the
Trustee or the Master Trust.

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<PAGE>

                  2.4. True Sales. The Master Trust and Funding Trust II intend
                       ----------
that the transactions contemplated hereby be true sales of the Receivables and
other Receivable Assets by the Trustee to Funding Trust II providing Funding
Trust II with the full benefits of ownership of the Receivables and other
Receivable Assets free and clear of any liens, and neither the Master Trust nor
Funding Trust II intends the transactions contemplated hereby to be, or for any
purpose to be characterized as, a loan from Funding Trust II to the Master
Trust. The Trustee shall reflect sales of the Receivable Assets hereunder on the
books and records maintained by the Trustee with respect to the Master Trust as
sales of assets, and shall treat such sales as sales for all purposes. 

                  2.5. Receipt of Payments after Closing Date. Funding Trust II
                       --------------------------------------
shall be entitled to all payments received or receivable with respect to any
Receivable sold and conveyed by the Trustee to Funding Trust II hereunder that
are received on and after the Cut-off Date. If the Trustee receives any payment
on a Receivable belonging to Funding Trust II, the Trustee promptly shall, upon
written request, turn such payment over to Harris Trust and Savings Bank
("Harris Trust"), as trustee under the Sale and Servicing Agreement, dated as of
December 15, 1997 (the "Sale and Servicing Agreement"), among National Auto
Finance 1998-1 Trust, National Financial Auto Funding Trust ("Funding Trust I"),
NAFI and Harris Trust and Savings Bank ("Harris Trust"). 

                                  ARTICLE III

                                  MISCELLANEOUS

                  3.1. Notices. All notices, demands and requests that may be
                       -------
given or that are required to be given hereunder shall be sent by United States
certified mail, posting prepaid, return receipt requested, to the parties at
their respective addresses as follows:

           If to the Trustee:

                    Bankers Trust Company
                    Four Albany Street
                    New York, New York  10006
                    Attn:  Corporate Trust and Agency Group - Structured Finance
                    Telecopier No.:  (212) 250-6439
                    Confirmation:    (212) 250-6652

          If to Funding Trust II:

                   National Financial Auto Funding Trust II
                   c/o Chase Manhattan Bank Delaware, as Trustee
                   1201 N. Market Street
                   Wilmington, Delaware  19801
                   Attn:  Corporate Trust Administration Department

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                   Telecopier No.:  (302) 984-4903
                   Confirmation:    (302) 428-3375

          If to Financial Security Assurance Inc.:

                   Financial Security Assurance Inc.
                   350 Park Avenue
                   New York, New York  10022
                   Attention:  Surveillance Department
                   Re:  National Auto Finance 1998-1 Trust, 5.88% Automobile
                        Receivables-Backed Notes
                   Telecopier No.:  (212) 339-3518,
                                    (212) 339-3529
                   Confirmation:    (212) 826-0100

          If to Harris Trust and Savings Bank:

                   Harris Trust and Savings Bank
                   311 West Monroe Street, 12th Floor
                   Chicago, IL  60606
                   Attention:  Indenture Trust Division
                   Telecopier:           (312) 461-3525
                   Confirmation:         (312) 461-4662

                  3.2. Choice of Law. This Agreement shall be construed in
                       -------------
accordance with the laws of the Sate of New York and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.

                  3.3. Counterparts. This Agreement may be executed in any
                       ------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument. 

                  3.4. Assignment. This Agreement may not be assigned by the
                       ----------
Trustee or Funding Trust II except as contemplated by this Section; provided,
however, that simultaneously with the execution and delivery of this Agreement,
(i) Funding Trust II shall assign all of its right, title and interest hereunder
to Funding Trust I pursuant to that certain Sale Agreement, dated as of December
15, 1997 between Funding Trust II and Funding Trust I, and (ii) Funding Trust I
shall assign all of such right, title and interest to the National Auto Finance
1998-1 Trust pursuant to the Sale and Servicing Agreement, as provided in
Section 2.1 of the Sale and Servicing Agreement, to which the Trustee hereby
expressly consents.

                  3.5. Third-Party Beneficiaries. This Agreement will inure to
                       ------------------------- 
the benefit of and be binding upon the parties hereto and shall also be for the
benefit of Funding Trust I, Harris Trust, for the benefit of the Noteholders,

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and the Insurer, each of which shall be considered to the third-party
beneficiaries of this Agreement and shall be entitled to rely upon and directly
enforce the provisions of this Agreement. Except as otherwise provided in this
Agreement, no other Person will have any right or obligation hereunder. The
Insurer may disclaim any of its rights and powers under this Agreement upon
delivery of a written notice to the Trustee and Funding Trust II.

                  3.6. No Petition. The Trustee hereby agrees not to cause the
                       -----------
filing of a petition in bankruptcy against Funding Trust II until one year and
one day after the maturity of any securities evidencing a beneficial interest in
or secured by Receivable Assets sold, transferred or otherwise conveyed by the
Trustee to Funding Trust II, NAFI or any affiliate of either. 

                  3.7. Further Assurances. It is the Trustee's intention to
                       ------------------
convey its entire rights, title and interest in the Receivable Assets or other
assets related thereto acquired from Funding Trust II pursuant to the Pooling
and Administration Agreement.

                  3.8. Limitation of Liability of Funding Trust II Trustee:
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Notwithstanding anything contained herein to the contrary, this Agreement has
been executed and delivered by Chase Manhattan Bank Delaware not in its
individual capacity but solely as trustee and in no event shall Chase Manhattan
Bank Delaware, have any liability for the representations, warranties,
covenants, agreements or other obligations of Funding Trust II hereunder or in
any of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of Funding Trust II.

                  3.9. Limitation of Liability of Master Trust Trustee:
                       -----------------------------------------------
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed and delivered by Bankers Trust not in its individual capacity but
solely as trustee and in no event shall Bankers Trust, have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Master Trust hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of Master Trust. 

                  3.10. Amendment. This Agreement may be amended in writing by
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the parties hereto with the prior written consent of Financial Security, to cure
any ambiguity or to correct any provisions in this Agreement.

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<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.


                             NATIONAL FINANCIAL AUTO FUNDING TRUST II

                             By:    CHASE MANHATTAN BANK 
                                    DELAWARE, not in its individual capacity,
                                    but solely as trustee of National Financial 
                                    Auto Funding Trust II,


                             By:  ______________________________________
                                    Name:
                                    Title:


                             NATIONAL FINANCIAL AUTO RECEIVABLES MASTER TRUST


                             By:    BANKERS TRUST COMPANY, not in its 
                                    individual capacity, but solely as Trustee 
                                    of National Financial Auto Receivables
                                    Master Trust


                             By:  ______________________________________
                                    Name:
                                    Title:



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